Outsourcing
Outsourcing means engaging a third-party company to perform work or deliver a service, rather than doing it with in-house staff. It describes who does the work (a vendor), not where the work happens - which is why outsourcing is often confused with offshoring or nearshoring, terms that describe geography rather than vendor structure.
An outsourced engagement can be onshore, nearshore, or offshore. The global software development outsourcing market was valued at approximately $430 billion in 2023 and is projected to exceed $600 billion by 2027 (Grand View Research). Cost-cutting as the top driver for outsourcing has fallen to 34% of enterprises, down from 70% in 2020, as companies increasingly outsource for access to specialized skills and speed rather than cost alone (Deloitte Global Outsourcing Survey).
For the full comparison against offshoring and nearshoring, see Offshoring vs Nearshoring vs Outsourcing: The Definitive Comparison.